Obesity remains a serious health problem and it is no secret that many people want to lose weight. Behavioral economists typically argue that “nudges” help individuals with various decisionmaking flaws to live longer, healthier, and better lives. In an article in the new issue of Regulation, Michael L. Marlow discusses how nudging by government differs from nudging by markets, and explains why market nudging is the more promising avenue for helping citizens to lose weight.

Two long wars, chronic deficits, the financial crisis, the costly drug war, the growth of executive power under Presidents Bush and Obama, and the revelations about NSA abuses, have given rise to a growing libertarian movement in our country – with a greater focus on individual liberty and less government power. David Boaz’s newly released The Libertarian Mind is a comprehensive guide to the history, philosophy, and growth of the libertarian movement, with incisive analyses of today’s most pressing issues and policies.

Tag: paul ryan

Please join us at 9:00pm Eastern on Tuesday, January 25, 2011 for live commentary during President Obama’s State of the Union address and the response given by House Budget Chairman Paul Ryan (R-Wisc.). Here is our panel of expert bloggers (click each name for their respective Cato@Liberty archives):

Rep. Paul Ryan’s (R-Wis.) “Roadmap for America’s Future” proposes even tighter limits on Medicare’s growth, leading columnist Bruce Bartlett to opine, “the Medicare actuaries have shown the absurdity of the Ryan plan by denying that Medicare cuts already enacted into law are even worthy of projecting into the future.”

On the contrary, experience and public choice theory suggest that the Ryan plan has a better shot at reducing future Medicare outlays than past efforts, because the Roadmap would change the lobbying game that fuels Medicare’s growth.

In his speech in Ohio yesterday, did President Obama draw a stark enough contrast with House Minority Leader John Boehner, whom he attacked by name eight times, to help his party in November?

My response:

The contrast the president drew was clear enough. His problem is that the people aren’t buying what he’s selling – and for good reason. His ideas, far from being new, have been tried countless times, both here and abroad. They don’t work. And they undermine basic American principles about individual liberty and free choice.

So when Obama says that Boehner and the Republicans have no new ideas, he’s partly right. (They have new ideas about how to address unsustainable entitlement programs – ask Rep. Paul Ryan.) At least in their rhetoric – their behavior in office, alas, is too often another matter – Republicans stand in substantial part for old ideas that work and conform more closely to the nation’s first principles, starting with lower taxes, less regulation, and less government management of the economy. That contrasts sharply with Obama’s countless “programs” to “stimulate” the economy, his targeted tax and spending schemes to create “green jobs,” to sell cars, and on and on. Listening to him, you’d think the economy would collapse were it not for Washington’s management of it.

The truth is quite the opposite, of course, as Americans are coming increasingly to appreciate. Economies prosper when entrepreneurs with ideas and capital are able to employ both for profit. But they won’t do that when conditions are uncertain, as they are when government meddles recklessly and uncertainly at every turn. How often have we heard entrepreneurs in recent months saying that they’d like to hire more people, but with the uncertainty of ObamaCare and so much else coming out of Washington, they’re sitting on their capital? And who can blame them?

So the answer is, get out of their way and let them do what they do best. But that’s not the Obama way. This “community organizer” – who organized people to demand more from government – seems to have no grasp of how economies work, beyond the failed command-and-control model. Even Fidel Castro has just now admitted that a government run economy doesn’t work. So either Obama smells the coffee coming now even from Cuba, or elections will take care of the matter.

I haven’t officially weighed in on the health-care aspects of the Roadmap, but hope to do so in the near future. For the moment, I’ll use Ryan’s oped to stress a distinction that is crucial to thinking clearly about health care costs.

Ryan writes of the dangers of an un-reformed Medicare program (emphasis added):

While those forms of government rationing may reduce spending, that’s not the same as reducing costs. On the contrary, those rationing measures may increase health care costs.

Suppose Medicare set its prices for hip and knee replacements so low that no medical-device manufacturer would provide the hardware and no surgeon would perform the procedures. Medicare spending on hip and knee replacements would fall. But costs may rise: more seniors would be walking around — or not walking around — in severe pain. Pain and reduced mobility are costs, even if they don’t show up in the federal budget or household budgets. (Indeed, those costs would be so severe that overall Medicare spending could rise as seniors bought more wheelchairs, sought treatment for pressure sores, etc.). This is the main reason conservatives criticize Canada’s Medicare system and the British National Health Service: reducing health care spending often increases costs.

I therefore request universal compliance with Cannon’s First Rule of Economic Literacy: Never say costs when you mean spending.

House Republicans unveiled a bold strategy to cut 0.017 percent from the $3.7 trillion federal budget this week. Republican Whip Eric Cantor unveiled the GOP’s “YouCut” website, which includes five possible spending cuts for citizens to vote on. Mr. Cantor promised to take the favored cut to the House floor next week for members to consider.

The basic idea of YouCut is a good one — getting citizens actively involved in solving the government’s giant deficit problem and focusing congressional attention on cutting the bloated budget.

But the GOP leadership make themselves look silly by offering such small cuts. The suggested cuts on the new website average just $638 million in annual savings, which is just 0.017 percent of total federal spending. Put another way, it is just $1 of cuts for every $5,800 of federal spending. The average YouCut savings idea is just 0.04 percent of this year’s federal deficit of $1.6 trillion. So we would need 2,500 cuts of this size to balance the budget.

It’s a mystery why the Republican leadership can’t offer more than tiny spending reforms. They’ve got lots of sharp staffers who know how wasteful many large programs are and understand the need to terminate whole agencies. It’s true that YouCut will offer new cuts every week, but so far the cuts are very timid.

The second-largest YouCut idea this week is to refocus “community development” spending on those cities that are the most needy. But the whole idea of the federal government spending money on local projects such as parking lots is both economically absurd and an obvious violation of the Tenth Amendment.

Come on Republicans, you can do better. Terminating all of HUD’s $13 billion in annual community development spending, for example, ought to be an easy vote for any member claiming to be a fiscal conservative.

Some Republicans do understand the nation’s fiscal emergency and the need for bold action. Paul Ryan, for example, has his excellent roadmap proposal. But thus far with YouCut, we have the Empire State Building engulfed in flames and Mr. Cantor sending in a toddler with a squirt gun to solve the problem.

Still, the House Republicans have created a tool that citizens can use to get the message across about the need for much larger reforms. The YouCut website encourages people to send in their own budget-cutting ideas. I’ll be sending some in, and folks, feel free to borrow ideas from the “Spending Cut” tables on www.downsizinggovernment.org.

I don’t think conservative voters, tea party activists, and other citizens concerned about the nation’s economic future want to cut 0.017 percent from the budget. I think they want to cut 10 percent, 20 percent, 30 percent, or more. So send your suggestions into YouCut, and we will see whether the GOP puts away the squirt guns and pulls out the fire hoses.

Barney Frank (D, MA), Ron Kind (D, WI), Paul Ryan (R, WI) and Jeff Flake (R, AZ) make compelling arguments for finding a better and more permanent solution to the dispute than the current (dodgy) deal with Brazil, including arguments about fiscal responsibility, the adverse effects of distorting markets in this way, and the implications for the U.S. economy of continuing to operate the cotton program in its current form.

Should we fail to effectively reform [the cotton] program now, American businesses and workers wil pay the price because we refused to write a law that complies with our international obligations. We cannot expect our trading partners to play by the rules if we are not willing to do the same. [emphasis added]

The press release from Rep. Flake’s office contains some great quotes, too. Flake, for example, says, “This proposal takes our federal farm subsidy policy from the impractical to the absurd.”

But I’ll give the last word to Rep. Frank, who has this gem to offer:

[T]he Obama administration apparently feels compelled to preserve our right to subsidize American cotton farmers by extending that subsidy to Brazilian cotton farmers. People looking for an illustration of the meaning of the phrase, ‘from bad to worse,’ need look no further.

Senators Ron Wyden and Judd Gregg recently introduced the “Bipartisan Tax Fairness and Simplification Act.” There is a lot of interest in this plan, so I’ve put together some “pros” and “cons” from my small-government, flat-tax perspective.

INDIVIDUAL TAX CHANGES - PRO

Scraps the alternative minimum tax.

Cuts the number of rates from six to three.

Reduces the tax subsidy for municipal bonds.

Creates Lifetime Savings Accounts (LSAs)–like Roths IRAs except better because all withdrawals are tax-free. This is a very important reform, and by the way, one that Canada has enacted already. See here.

INDIVIDUAL TAX CHANGES - CON

Keeps the top tax rate at 35 percent, which is quite a bit higher than the 28 percent acheived by the Tax Reform Act of 1986.

Increases the top capital gains and dividend tax rate from 15 percent to 23 percent.

Triples the standard deduction, which would likely take more people at the bottom end off the income tax rolls. That would simplify the code, but at the expense of increasing the demand for big government.

Repeals the exclusion on income earned abroad by U.S. citizens, which would likely damage the operations of U.S. multinational companies.

Retains all the most distortionary tax breaks under the individual code, including the mortgage interest deduction.

CORPORATE TAX CHANGES - PRO

Cuts the top corporate tax rate to 24 percent. This is a crucial reform.

Cuts corporate welfare spending, which Wyden-Gregg notes is about $90 billion a year, based on a Cato Institute analysis.

CORPORATE TAX CHANGES - CON

Subjects the foreign income of U.S. multinational companies to immediate taxation. That tax approach is not followed by any major advanced economy, and it would put U.S. firms at a disadvantage in global markets.

Broadens the business tax base in other ways that move in the wrong direction, such as repealing the expensing of energy exploration and development costs. Note that some of the plan’s corporate base broadening ideas make sense–such as reducing the value of interest deductions–but only if the revenue raised is used to reduce the statutory rate (which it does seem to be here).

Wyden-Gregg is a start, but it hardly simplifies the tax code at all and it doesn’t reduce individual rates. However, it does cut the corporate rate and it includes LSAs, which would revolutionize personal savings. So we can take heart that supply side tax policies still garner some support on Capitol Hill.